Amazon signs another tax deal

Amazon.com Inc. will begin to collect sales tax on Nov. 1, 2013, from customers in Massachusetts, the retailer and state officials announced yesterday.

As part of the agreement, Amazon, No. 1 in the Internet Retailer Top 500, has promised to create hundreds of jobs in the state and to work with state officials in support of pending federal legislation designed to produce states with more sales tax revenue from online and catalog purchases. In return, Amazon gets another year to avoid sales tax collection even though its acquisition earlier this year of warehouse robotics company Kiva Systems Inc., which is based in Massachusetts, requires it to collect sales tax in the state under existing law.

“We look forward to creating hundreds of high-tech jobs in Massachusetts and continuing to work with Gov. Patrick, state leaders and Congress to pass federal legislation permitting interstate sales tax collection,” says Paul Misener, Amazon’s vice president of global public policy. “Federal legislation is the only way to level the playing field for all sellers, the only way for states to obtain more than a fraction of the sales tax revenue that is already owed, and the only way to fully protect states’ rights.”

Under existing federal law, a state can require sales tax collection only Internet and catalog retailers with an in-state physical presence, such as stores, distribution centers, headquarters offices or an operation such as North Reading, MA-based Kiva, which Amazon acquired in May for $678 million. Kiva makes robots that are designed to increase the efficiency of warehouses by automatically moving racks of products to workers for picking and packing orders.

Amazon has signed similar tax deals in several other states where it operates or plans to operate distribution centers. It started collecting sales tax earlier this year in California, Pennsylvania and Texas, and it plans to begin collecting sales tax over the next several months in Arizona, New Jersey and Virginia. It also collects tax in Kansas, Kentucky, New York, North Dakota and its headquarters state of Washington.

There are at least three versions of federal legislation that Amazon supports, each designed to give states the authority to mandate sales tax collection by all retailers, regardless of their in-state physical presence. But none has been put to a vote in Congress. One bill, the Marketplace Fairness Act, was initially filed as an amendment this fall to the National Defense Authorization Act by Marketplace Fairness sponsor Sen. Dick Durbin (D, IL), but the Senate move to close discussion on the defense bill before Durbin’s amendment could be considered, a spokeswoman for Durbin says.